Tax increases? (Probably) not this year

JACKSON – A tax increase appears to have little support among those in a position to make it happen.
As the state struggles with its budget shortfalls, House and Senate leaders of both parties, as well as Republican Gov. Haley Barbour, are turning a deaf ear to tax increases.
House Speaker Billy McCoy, D-Rienzi, recently said that even if the Senate and Barbour support a tax increase, “We would not entertain it.”
“No new taxes” has been the mantra of Barbour and the Republican leadership of the Senate, though they did advocate a tax increase on the hospitals, which passed last year, and yielded to the House leadership and agreed to a tax increase on cigarettes last year.
But during the 2009 session, Barbour said he would not support any other tax increases.
“Raising taxes during an economic downturn
slows recovery and puts an unfair burden on our taxpayers,” Barbour wrote recently in his budget proposal.
Echoing those thoughts, Republican Lt. Gov. Phil Bryant, who presides over the Senate, said, “We believe the worst thing we could do now is increase taxes on individuals and businesses.”
Still, individual legislators will file bills to increase taxes – whether on income, retail sales, casinos, liquor or something else.
Rep. John Mayo, D-Clarksdale, for instance, is proposing a tax on soda. His bill would place a two-cent tax on syrup at the distributor level.
He said it makes sense as a way to raise additional revenue, and to deal with the state’s obesity level, which is the highest in the nation.
But without the support of the leadership in either chamber, it will be nearly impossible for any tax legislation to gain traction.
While higher taxes might not appeal to the top politicians, others aren’t as quick to dismiss them.
But Elizabeth McNichol, a state fiscal policy expert for the non-partisan Center on Budget and Policy Priorities, said during a recent forum sponsored by the Mississippi Economic Policy Center that studies have shown that massive state budget cuts can be more harmful – in terms of economic impact and in terms of reducing vital services – than tax increases.
She advocated “a balanced approach” that would include tax increases and more modest budget cuts.
“As the needs of Mississippi’s working families continue to increase, the state has fewer resources to meet their needs,” said Ed Sivak, director of the Mississippi Economic Policy Center.
“Solving a problem this big requires a balanced approach that includes raising revenues. A cuts-only strategy will only hold Mississippi back when prosperity returns.”
Sivak’s group has proposed adding a bracket to the income tax to capture more income from the wealthy and placing a sales tax on services, as recommended last year by Barbour’s own tax study commission.
The Mississippi Economic Policy Center argues that in Mississippi, low-income people pay a greater percentage of their income in taxes because of the 7 percent sales tax, which is one of the highest in the nation.
The governor counters that taxes must be viewed in their totality and that the regressive state sales tax is offset by a progressive federal income tax that collects a greater percentage of income from the wealthy.
While an increase is not likely, there appears to be some consensus that fees might be increased on some services performed by state government.
The House leadership has long argued that many fees charged by Mississippi state government are much lower than what is charged in surrounding states and not enough to pay for the service provided.
“If you are using state government, I think you ought to pay for it,” said House Appropriations Chair Johnny Stringer, D-Montrose. “Right now the general taxpayer is footing the bill.”
Possibilities where fees could be increased include services conducted by the Secretary of State’s office primarily for businesses, automobile title fees, services conducted by the state Department of Agriculture and Commerce and pollution inspections performed by the Department of Environmental Quality.
But at best, the fees might generate only tens of millions of dollars – far short of the budget shortfall of $700 million that Barbour says will exist for the coming year and of $1.2 billion that he says will exist the following year.
“We may adjust some fees,” Barbour said.
“We want to do things that help create private-sector jobs. We will also try not to do things to reduce private-sector jobs, which is what a tax increase would do.”
Also, a consensus appears to have emerged on giving the state Department of Revenue money to buy a new computer system that will improve its ability to collect taxes and to provide them more auditors.
“We cannot let tax cheats deprive the state of revenue it is owed already,” Barbour said.
Both House and Senate leaders have embraced a tax amnesty program that they estimate will produce $35 million.
Contact Capital Bureau Chief Bobby Harrison at (601) 353-3119 or bobby.harrison@djournal.com.